Over the years, the patient base of our pharmacies has changed dramatically. When I started in pharmacy, for example, we had a significant cash business. The percentage of our business that went thru insurance was growing steadily: the number was near zero not that many years before. Then came Medicare Part D, and cash customers became rare. Today, nearly all our pharmacies’ business is submitted to a third-party payor.
Back in the 80’s and early 90’s, we kept tabs on what percentage of our business was insurance. Today, we pay more attention to which insurances are most impactful in our business.
In Iowa, for example, commercial insurance has been predominantly represented by one company, and only recently have we seen that domination fade. That means that if that payer made any changes that impacted our reimbursement, our pharmacy would be subject to real consequences.
While commercial insurance is still heavily weighted in my state by a few primary players, diversification is beneficial: not all our eggs are in one proverbial basket, so to speak. Medicare Part D is another basket, and the total percentage of our business that Medicare Part D represents is yet another key metric we are interested in.
What makes both measurements more difficult has been the consolidation of the Pharmacy Benefit Manager (PBM) market. Today, almost all our business (both commercial and Medicare) is managed by three or four PBMs. And one or two of these represent most of our current business.
It is more important than ever to understand which companies have heavily weighted influence over your stores. This insight shows you where you are most vulnerable to outside pressures. With this information, you can make decisions on individual prescription drug plans you might want to drop due to unprofitability.
Teasing this information out is becoming more complicated because the PBMs have created their own buckets for plans. These buckets are described by the BIN, PCN and GROUP numbers. The combination of these variables can, and does change, year to year. Often there isn’t an easy way to identify what plan a patient is on unless you have a copy of the patient’s current card on file.
Running a payer analysis on your store(s) is an important tool you can use to better understand your strengths and weaknesses. If your payer mix is anything like mine, you might need a hand to match BIN:PCN:GROUP combination to different types of plans (Commercial, Medicare Part D, Medicaid, etc). If you use a PSAO (Pharmacy Services Administration Organization) that works on the contracting for your store(s), they are one place to gather this information.
As always, if you need additional information or help, reach out to us. Make Every Encounter Count, even when you are counting prescriptions in each bucket!
